BDFM Online
Wednesday, November 22, 2006
Johannesburg Metro Editor
GAUTENG was considering joining Western Cape in proposing the introduction of a fuel levy to bring in revenue as the province faced a finance crunch, finance MEC Paul Mashatile announced yesterday during his presentation of the medium-term 2006-07 budget.
The announcement came as Western Cape said its controversial fuel levy, of 10c/l, was likely to come into force in 2008.
Mashatile said Gauteng, which has a R610,5m deficit, was facing financial challenges caused by an increase in population resulting from continued migration and the inclusion of Winterveld, Ekangala and Mabopane in the province.
As a result, the province would also introduce toll roads.
"According to the midyear estimates, there are currently 9,4-million people living in Gauteng. This puts serious pressure on available resources," he said.
Mashatile's fuel levy announcement took opposition parties by surprise. The Democratic Alliance (DA) opposed the levy, saying Gauteng residents were already paying more for petrol than other South African provinces.
Hermene Koorts, DA spokeswoman on finance, said yesterday that the province should improve its collection of revenue before introducing new taxes.
"Gauteng should first look at collecting existing taxes, such as motor licensing, before introducing new taxes. Residents are overtaxed already and new taxes are unlikely to help the province's goal of attracting new business."
Incoming Gauteng municipal councils inherited municipal debt of about R15bn in March, largely as the result of poor debt collection. Projected revue for the 2006-07 fiscal year is R33,9bn and expenditure is R35,2bn.
Mashatile said a feasibility study was to be carried out for the proposed levy and that would be presented to the executive council for deliberation shortly.
"Other mechanisms of optimising provincial revenue are currently being explored, including tolling freeways," he said.
"This will allow us to raise private sector funding for the maintenance and construction of high-order roads. Funds from the fiscus will then be channelled towards secondary and primary roads in our townships."
The introduction of toll roads was announced recently by transport MEC Ignatius Jacobs during last month's Transport Week, despite the fact that the proposal to introduce a fuel levy in Western Cape has been met with widespread opposition, including threats of mass action by the Congress of South African Trade Unions.
The constitution empowers provinces to put in place levies to raise their own revenue. It is assumed that government has to take into account the whole tax bill to ensure that residents are not overtaxed. Western Cape will be the first province to impose a fuel levy.
Mashatile said Blue IQ was in the process of being restructured to allow it to raise funding against its balance sheet.
"Equally, the Gauteng Enterprise Propeller will be corporatised and restructured to allow it to use seed funding from the fiscus to gear-in private sector funding to assist small enterprises and black empowerment companies," he said